Financial

Build wealth

  These are financial rules that should be taught in school. 


When living a simple life, keeping your finances simple is a must. 


Instead, they are found in books like the Richest Man in Babylon.  
1. Learn to make money and pay yourself a minimum of 10%. No matter what your job or skill set is you need a source of income. Out of that source of income make sure you are paying yourself. It is not about how much you make but how much you keep. Keep a minimum of 10%, more if possible. 


2. Budget and cut out desires from needs. You need to live on a budget and make sure you cut as much of your desires out as possible. If you live chasing your desires now your expenses will equal your income if not more. This will make it hard to save money and put money to work. 


3. Invest and make your money work for you. There are many options from dividend paying stocks to real estate. Seek wise counsel and put your money to work. 


4. Protect your money, do not fall for get rich overnight schemes. Manage risk. The last thing you want to do with your hard-earned money is not keep it safe or invested in some get rich overnight scheme. You should look for opportunities when they come but be careful on what is an opportunity, and a get rich overnight scheme. 


5. Buy your own home, grow produce and be as productive as possible. Owning your own home is an effective way to build, wealth as you are not paying a property owner. You are putting money towards your own housing. Pay it off as quickly as possible and this will help you live and retire without a housing payment. Make your house productive as meaning be as self-sufficient out of it as you can. 

6. Secure and focus on income stream for retirement. When you retire you want a reliable source of income whether it is the investment you have been making, or some other type of passive income. Do this as soon as possible. The sooner you focus on this the bigger it will grow. 


7. Learn to be as wise as possible making more money from the same, or other streams of income. Learn your field and learn as much as you can about making money. This is going to help you avoid losing money and help you keep a reliable source of income coming in that you are comfortable with. The more you know in your own field the more valuable you are. The more you know about making money in other areas the better opportunity you have. 


Track your Net-worth. 

Your Net-worth is your assets minus liabilities. Take the total of everything you own minus what you owe. There are plenty of apps for this. I personally use personal capital. It is my favorite out of all the ones I have tried. 


Debt is your enemy. 

Pay off your debt as quickly as possible. Debt is not your friend; it is your enemy. You are usually paying interest on it as the Bible says the borrower is a slave to the lender. Pay off your debt owe no man anything. This is going to help you increase your net worth rapidly. 

We cannot afford to be without adequate protection.  

Make sure your money is protected whether it is from insurance or put up in an account. The last thing you want to do is have it where it can catch fire and burn with someone who does not know what they are doing and can lose it, or thieves can break in a steel it. 


A good percentage of wages spent. 

70% living expenses  

10% savings/investment  

20% any debt until debt free, and then investment  

The less you spend on living expenses and getting out of debt the more you can invest and put to work. 


Retirement? 

This should be simple so do not over complicate things. What is the minimum you can live on? Assuming you pay off all debt. Can you live on 30k a year? That is 2,500 a month. Or will it take double that at 60K a year? That would obviously be 5,000 a month. Once you figure that out you need to know where you plan to receive that income. Do not count on Social security. Think about how much yield a year you will need. If you are thinking stock market dividends 3% a year on 1 million will get you the 30k a year mark. So will 10% on 300k. Usually stocks that pay 10% are risky. You can find ETF’s that pay 3% or stocks like Abbvie inc. that pay close to 5%. Stocks like Verizon are close to 4% or a utility sector like XLU pay 3.8% and VYM is 4. You can find 10% yield but feel comfortable with what you own. Most stocks that pay 10% are risky and the chart will show that. 

Of course, you can have other sources of income like rental properties, businesses etc. Pay off all debt as soon as possible and figure out what you need to live the lifestyle you want. Work on building up your source of income for retirement. A lot of people could retire a lot sooner if they did not create such an expensive lifestyle. Do not spend your time to building debt, instead spend it building some type of investment that will yield you enough for retirement. Great reason to own your home as well instead of renting. If you are renting that will be a part of your budget that you will always have to pay. Buy a house and pay it off. The most you will have to worry about is taking care of it. Do not lease a car, buy one pay it off and take care of it. The quicker you own the things that you will need and be debt free the more you can put towards what you need to retire. 

Also do not forget to look outside the country you reside in. You can live comfortable for a couple thousand, dollars a month on some genuinely nice beaches. Places like Costa Rica is good options. Regardless of you need to figure out how you would like to retire, where you would like to retire, and what you will need to retire. Then start making your money work for you and stop working for it. 


Compound Interest should be your focus. 

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who does not … pays it. 

Compound interest is the most powerful force in the universe. 

Compound interest is the greatest mathematical discovery of all times. 

  • Albert Einstein 

Most people are content with 10% of compound interest a year. Let us say you started with $1,000, added $360 (maybe more or less depending on your finances) a month, made 10% a year for 15 years. One reason if you start investing at the age of 18 it takes 44 years to retire.  

Principal Amount: 1,000 

Monthly Deposit: 360 

Period (month): 180 

Annual Interest Rate: 10% 

Compounding: Annually 

Balance will be: 

Total Principal Amount: 65,800.00 

Interest Amount: 82,960.89 

Maturity Value: 148,760.89 

APY: 10.0000% 

What would it look like if you started with $1,000 added $360 a month, made 20% a year for 15 years? 

Principal Amount: 1,000 

Monthly Deposit: 360 

Period (month): 180 

Annual Interest Rate: 20% 

Compounding: Monthly 

Balance will be: 

Total Principal Amount: 65,800.00 

Interest Amount: 362,141.16 

Maturity Value: 427,941.16 

APY: 21.9391% 

Let us look at that same thing but for ten years. 

Principal Amount: 1,000 

Monthly Deposit: 360 

Period (month): 120 

Annual Interest Rate: 20% 

Compounding: Monthly 

Balance will be: 

Total Principal Amount: 44,200.00 

Interest Amount: 100,719.13 

Maturity Value: 144,919.13 

APY: 21.9391% 

What would it look like if you started with $1,000 deposited $360 a month, and made 10% a month for 15 yearsKeep in mind most people are happy if they get 10% a year. 

Principal Amount: 1,000 

Monthly Deposit: 360 

Period (month): 180 

Annual Interest Rate: 120% 

Compounding: Monthly 

Balance will be: 

Total Principal Amount: 65,800.00 

Interest Amount: 140,011,848,239.10 

Maturity Value: 140,011,914,039.10 

APY: 213.8428% 

Look at that amount for ten years.  

Principal Amount: 1,000 

Monthly Deposit: 360 

Period (month): 120 

Annual Interest Rate: 120% 

Compounding: Monthly 

Balance will be: 

Total Principal Amount: 44,200.00 

Interest Amount: 459,788,821.34 

Maturity Value: 459,833,021.34 

APY: 213.8428% 

I started trading stocks at the age of 18 when I learned my company did not contribute anything to our 401K. It took a lot of hard lessons, years of study and experience to be able to overcome the 10% a year I refused to settle for. No matter if you decide to handle your own money or let an All-Star Mutual Fund handle it, focus on the compound interest. The more you can put in the better. I authored a book of my experiences and kept it simple, also showing what I found to work best. You can find it in the book below. No matter what download a compound interest calculator and play around with it. Set your goals and hit them. The one I used above is FN Calculator. I keep it downloaded on my phone. 







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